The Canadian pay equity model requires employers to assess the value of female-dominated jobs and male-dominated jobs within an organization by evaluating the value of the jobs on the basis of skill, effort, responsibility and working conditions. Female-dominated jobs which are paid less than male-dominated jobs of the same or comparable value need to be paid the same. This type of job evaluation permits jobs with entirely dissimilar job functions to be valued. The Equal Wages Guidelines, 1986 under the Canadian Human Rights Act was arguably the first piece of pay equity legislation in the country. This was followed by private sector pay equity laws in Ontario and Quebec. However, the provincial laws do not simply rely on employee or union complaints and, instead, set out a proactive compliance regime with various milestones and deadlines. The Equal Wages Guidelines, 1986, on the other hand, are complaint-based and have a history of spawning notoriously lengthy litigation.

The Special Committee on Pay Equity tabled its First Report to Parliament on June 10, 2016. Among its 31 recommendations, the Special Committee recommends that the Government of Canada draft proactive gender pay equity legislation within 18 months of the tabling of the Report to apply to the federal public service, Crown corporations, federally regulated companies with 15 or more employees, and companies participating in the Federal Contractors Program. Federally regulated employers in Ontario and Quebec which can provide evidence of compliance with the provincial legislation would be exempt from the federal pay equity plan, monitoring and reporting requirements.

The Report recommends the creation of a pay equity commission and a pay equity tribunal. The legislation would require both unions and employers to be responsible for modeling, implementing, monitoring and maintaining pay equity plans and would prohibit unions and employers from negotiating collective agreements that would contravene the pay equity legislation. In fact, it was recommended that the legislation should stipulate that any pay equity agreement would supersede a collective bargaining agreement. A female-dominated job class would be one with at least 60% female incumbents for job classifications with 100 or more employees, or at least 70% female for job classifications with fewer than 100 employees.

The federal government announced in October 2016 that it first plans to consult with stakeholders and experts and then table proactive pay equity legislation by 2018. The legislation will cover 874,000 employees and 10,800 employers in the federal jurisdiction. There has been no comment from the Government on the Report’s recommendation to extend the requirements to provincially-regulated private sector employers participating in the Federal Contractors Program. The government has faced criticism from unions and from the NDP for delaying pay equity to 2018.

Employers who undertake reductions in force due to financial difficulties should not count on employee notice periods being reduced as a result of the financial troubles. This point was recently emphasized by the Ontario Court of Appeal in the decision of Michela v. St. Thomas of Villanova Catholic School.

Michela, Gomes and Carnovale were long-term teachers at St. Thomas of Villanova Catholic School, with 11, 13 and 8 years of service respectively. All worked under a series of one-year contracts. In May of 2013, the employer advised each of them in writing that they would not receive a contract renewal for the coming year because enrolment was expected to be lower. Subsequently, in June of 2013 each of them was provided with a termination letter and advised that notice was not owed because they were employed pursuant to fixed-term contracts.

The claims were dealt with by summary judgment, and the motions judge determined that due to the succession of fixed-term contracts, the employees were really indefinite term employees and entitled to common law notice of termination. However in determining that the reasonable notice period for each employee should be 6 months rather than the 12 months which was claimed, the judge made reference to the employer’s poor financial position.
In overturning the decision, the Court of Appeal made reference to the Bardal factors used to calculate reasonable notice at common law: the employee’s character of employment, length of service, age, and availability of similar employment having regard to experience, training and qualifications. The Court found that the motions judge had mistakenly viewed “character of employment” through the lens of the employer rather than the employees, and stated that the financial position of the employer does not factor into the calculation of reasonable notice. The court confirmed that while an employer’s financial position may be the reason for a termination without cause, the financial position of the employer does not justify a reduction in the notice period in bad times nor an increase when times are good.

For employers considering reductions in force during difficult times, it may be best to consider other options such as a temporary layoffs, ensuring that proper termination provisions are in place which provide only statutory minimums in the event of termination, or the provision of working notice. While legal advice should be sought in order to ensure the best plan of action, it is clear at the very least that employers should not count on a reduced notice period due to a difficult financial position.

The Pay Equity Act of Ontario requires every provincially regulated employer with ten or more employees to ensure that pay equity exists in the workplace. This is not a one-off compliance requirement. Rather, employers must maintain pay equity on an ongoing basis. This means that both unionized and non-union employers need to re-visit their pay equity compliance when changes occur in the workplace such as the creation of new job classes, significant changes to job duties, elimination of a prior male comparator job class or a business acquisition or reorganization. Pay equity compliance is voluntary and self-directed. However, the Pay Equity Commission operates two programs that permit the Commission to reach out to employers even in the absence of a complaint in order to determine whether the employer is pay equity compliant. These two programs are described briefly below.

Monitoring Program

The Monitoring Program has been underway for a number of years. By September 30, 2010 (most recent date for which information is publicly available), the Monitoring Program had contacted over 3,000 Ontario employers. In the past, the Pay Equity Commission tended to focus on particular industry sectors (for example retail, food) or geographic areas (for example Greater Toronto Area and northern regions of the province). However, the Monitoring Program is currently focussed on contacting employers who were flagged as part of the Wage Gap Program or did not respond to a contact under the Wage Gap Program. Pursuant to the Monitoring Program, the Pay Equity Commission contacts employers to request three years of compensation data and information about jobs, locations and the employer’s pay equity process. The Review Officer can require up to seven years of data where concerns are raised. If the employer is not compliant with the Pay Equity Act, the Review Officer will require compliance pursuant to a set time line.

Wage Gap Program

The Wage Gap Program was launched in 2011. Its goal is to cover all Ontario workplaces to determine whether wage gaps persist. Using the Dunn & Bradstreet listing of employers, the Pay Equity Commission has completed its pilot project of canvassing employers with 500 or more employees. As it winds down phase two, covering employers of 250 to 499 employees, it is now turning its focus to employers with 100 to 249 employees. Employers are not required to produce employee data for the unionized work force. Currently the Wage Gap Program is not contacting employers which have been visited by the Pay Equity Commission within the last ten years. If an employer does not respond by the deadline or the wage data indicates possible pay inequities, the file is referred to a Review Officer.

Our advice

The Pay Equity Act is unusual in that it does not include a limitation period. Therefore, it is possible for the Pay Equity Hearings Tribunal to order an employer to comply retroactively to a date in the early 1990’s, depending on when the company began operations in Ontario and depending on the size of the work force. We strongly recommend that all employers become compliant with the pay equity requirements, generally by selecting a realistic retroactivity date for which the employer has sufficient data about pay, gender dominance and job duties. Be sure that all new positions are evaluated under your job evaluation system. Keep records so that you can show compliance at least to your selected retroactivity date. Build pay equity compliance into the H/R systems by ensuring that all jobs have up to date job descriptions, all positions are evaluated under your job evaluation system and all newly created positions are immediately evaluated and paid according to your job evaluation system.

Ontario’s Pay Equity Commission recently published an interpretative guide designed to help employers understand their obligations under the Pay Equity Act. Introduced in 1987, the Pay Equity Act’s stated purposeis “…to redress systemic gender discrimination in compensation for work performed by employees in female job classes.” It applies to all private sector employers in Ontario that have ten or more employees and all public sector employers.

In addition to setting out the requirements for achieving and maintaining pay equity, the Guide also highlights the pay equity office’s pro-active monitoring program which it has undertaken in recent years to ensure that employers are complying with their statutory obligations.

On May 31, 2012 the Ontario Divisional Court ruled that the Pay Equity Act does not require the harmonization of wage grids as long as female employees achieve the same level of pay as men at the top of the grid. The Canadian Union of Public Employees (CUPE) appealed decisions by the Pay Equity Tribunal with respect to two Ontario employers: Lakeridge Health Corporation and the York Region District School Board. At both of these employers, it was found that workers belonging to the male dominated job class moved more quickly (nearly three times as fast) through pay levels than the workers belonging to the female dominated job class. The comparison was between the mostly male service workers versus the female dominated clerical staff.

In coming to its decision, the Divisional Court found that although the union argued that the fundamental objective of the Act is to “eliminate” gender discrimination in compensation, it would be more accurate to say that the purpose of the Act is to “redress” systemic wage discrimination in accordance with the detailed provisions of the legislative scheme.

The Court went on to state that “within that legislative scheme, the Legislature has made a number of choices about how pay equity is to be achieved…with the result that the Act does not contemplate the elimination of all discrepancies between comparably-valued male and female job classes.” At least one discrepancy that the Act does not contemplate addressing, as found in this case, is the time it takes to reach the highest rate of pay for men and women in comparable jobs. It has yet to be known whether this case will be appealed by CUPE.

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